Funds managed by Apollo affiliates are to acquire a 50 per cent stake in Broad Reach Power (Broad Reach), a utility-scale energy storage and renewable energy platform in the US, from EnCap Energy Transition Fund I (EETFI).
The Apollo Funds will acquire the stake from existing investor EnCap Investments LP (EnCap) and its co-investment partners Yorktown Partners and Mercuria Energy. EnCap and its co-investment partners will retain the other 50 per cent stake and, together with the Apollo Funds, commit to invest up to USD400 million of additional equity to fund Broad Reach’s continued expansion and growth pipeline.
Broad Reach is a leading energy storage platform in the US, applying advanced energy storage technology and power market analytics to improve the performance of renewable and power generation facilities. The company has more than 1.4 gigawatt hours of storage assets in operation or under construction and controls a 21-gigawatt (GW) portfolio of utility-scale wind, solar and energy storage power projects across the country.
“At Apollo we have been highly active in the energy transition, and we are thrilled to join EnCap in this investment in Broad Reach, which in our view is the premier energy storage leader in the US,” says Geoff Strong, Senior Partner and Co-Head of Infrastructure and Natural Resources at Apollo. “Broad Reach has a scaled, high-performing platform that is well positioned for strong continued growth, particularly as the shift to more intermittent clean energy increases volatility and drives demand for energy storage.”
Broad Reach CEO Steve Vavrik says: “Apollo is a world-leading investor with the expertise, capital and motivation to invest in a wide range of energy transition companies, and we are excited to welcome them to Broad Reach alongside EnCap, Yorktown Partners and Mercuria Energy. We view this as a significant vote of confidence in Broad Reach and our exciting growth prospects, as we continue to execute on our long-term goal to supply the nation with clean, reliable and affordable power.”
Corinne Still, Principal at Apollo, says: “This transaction unites Apollo with a terrific shareholder group that has demonstrated significant conviction, commitment, and success in building a large and nimble clean energy platform. We look forward to collectively supporting Steve and his team in their future growth.”
“Broad Reach has emerged as a disruptor in the dramatic transformation of the US electricity sector. We believe this transaction both validates the value created by EnCap’s sponsorship of Broad Reach and allows us to continue to participate in its dominant position in the market,” says EnCap Energy Transition Managing Partner Shawn Cumberland, also chairman of the Broad Reach board of directors. “Apollo is a sophisticated and experienced energy transition and power industry investor and will be an extremely valuable member in the expanded partnership to accelerate Broad Reach’s growth.”
EnCap has been one of the most aggressive pioneer investors in the fast-growing US battery storage business. EnCap’s energy transition platform established Broad Reach in 2019 by bringing together professionals with extensive experience in battery storage systems and proven developers with long track records in renewables. The acquisition by the Apollo Funds will also represent the first sale by EnCap’s USD1.2 billion Energy Transition Fund I. In addition to Broad Reach, EETFI controls a robust portfolio that includes Catalyze Energy (distributed commercial and industrial solar plus batteries), Solar Proponent (large scale solar), Triple Oak Power (wind power) and Arbor Renewable Gas (clean fuels), among others.
For the Apollo Funds, this extends a long track record of investing in or lending to companies supporting the clean energy transition. Most recently this includes committing more than USD820 million of funding to NextEra Energy Partners’ for its stake in a renewable energy generation portfolio; forming a new venture with Johnson Controls to provide sustainability and energy efficiency services; investing in US Wind, an offshore wind developer; forming a joint venture to accelerate the growth of renewable energy royalties company Great Bay Renewables; investing in Stagecoach Royalty, a renewable energy land royalties platform; acquiring a majority stake in Arlington Valley, a utility scale solar asset; acquiring Tullahennel, a wind power asset in Ireland; and investing in sustainable bioenergy producer AS Graanul Invest.
The transaction is subject to customary closing conditions and expected to be completed by year-end 2021. White & Case LLP served as the legal advisor and Citi served as the sole financial advisor to EnCap and Broad Reach. Kirkland & Ellis LLP served as legal counsel to the Apollo Funds.
